Tether hit record profits last quarter, putting it among the giants of traditional finance. But that $5.2 billion profit figure also puts it in the crosshairs of new rivals looking to share that market share:
Source: Messari
My latest article provides an in-depth analysis of the rapidly growing stablecoin industry, covering both the centralized and decentralized parts. We divide this industry into several main categories:
Source: Messari
Centralized alternatives tend to lack transparency and typically only see high transaction volumes when there are clear incentives. $PYUSD is one of the few stablecoins to gain trust and boast a billion-dollar market cap:
Source: Messari
More decentralized fiscally-backed stablecoins like $USD0 are growing rapidly through airdrop incentives and cooperative integrations with DeFi platforms like Morpho. $USD0 has a market cap of approximately $250 million and has reached this level quickly:
Source: Messari
Synthetic stablecoins like $USDe maintain their peg by holding both long-term spot and short-term futures positions. As the basis narrows, $USDe loses market share. But new protocols like Elixir aim to improve the Ethena model by adjusting its collateral support:
Source: Messari
Historically, stablecoins focused on maximizing decentralization and minimizing human intervention have not been in high demand. $GHO may be an exception, as it relies on an already growing active user base on AAVE:
Source: Messari
Novel designs often attempt to implement mechanisms that improve upon traditional collateralized debt position models. $DYAD is one of those stablecoins designed to leverage excess collateral in the system through a second-generation token called $KEROSENE. $KEROSENE allows users to mint more $DYAD based on their external capital. The more $KEROSENE a user holds on their NFT called NOTE, the more they receive from the liquidity pool:
DYAD-KEROSENE flywheel
Rising TVL: TVL (total value locked) rises as users look to take advantage of opportunities with high-yield liquidity providers (LPs).
$KEROSENE Deterministic Value Rise: The Deterministic Value (DV) of $KEROSENE is calculated as: $KEROSENE DV = (TVL - Minted DYAD) / $KEROSENE Supply.
4KEROSENE PRICE Rising: The price of $KEROSENE should match its Deterministic Value (DV).
DYAD-USDC Pool Earnings Rise: $KEROSENE emissions from the pool become more valuable on a dollar value basis.
Source: Messari
New stablecoins in these categories compete on aspects such as yield, accessibility, liquidity, stability, and capital efficiency. New designs or adjustments to old designs will have different trade-offs:
Source: Messari
Image source: "Deep Wave TechFlow"
The landscape of the stablecoin industry is changing with new entrants entering every week.
[Disclaimer] There are risks in the market, so investment needs to be cautious. This article does not constitute investment advice and users should consider whether any opinions, views or conclusions contained in this article are appropriate for their particular circumstances. Invest accordingly and do so at your own risk.
This article is reproduced with permission from: "Deep Wave TechFlow"
Original author: Addy, Messari
